In western Europe, the revenue generated by voice is on the decline. The current thinking in western Europe further suggests that while voice revenues are still expected to decline at a rate of around 10 percent per annum, revenues from new appealing applications and m-commerce will rise, and it is entirely possible that the projected uplift of 30 percent will turn out to be highly prudent. This prediction may turn out to be good learning for us and should help us plan our strategies in a more timely and sensible way. In the Indian context, operators have to vision their product development, and marketing & selling strategy in such a innovative way that it enhances their brand-positioning and revenue streams.

While developing a futuristic business model, one may consider revenue generation by three distinct elements

• Voice
• Application services and content
• M-commerce

In the battle for market share, one of the big questions facing Indian operators is how to achieve any meaningful form of differentiation in an increasingly competitive environment. Applications offered will play a key role in sustaining revenue streams when voice ARPU is expected to go down because of price war and fierce competition. The applications to be offered for metros may be quite different initially from that offered for circles. New entrants in Metros for example, may switch over to quite a few of the advanced applications {horizontal and personal applications—Internet access, m-commerce, credit phone etc. Vertical and corporate applications—Professional services, consulting and application development, mobile VPN, etc, apart from traditional applications like voice (local, long distance, international), basic VAS (Voice mail, call forwarding etc)} right from the start whereas circle operators may have to adopt a different strategy depending upon the urban, semi-urban and rural areas.

Thus, creation of application portfolios may be regarded as an evolutionary process for circle operators albeit one informed by an evolved marketing strategy. Good market research coupled with right market segmentation, will clearly define the proper strategy to be followed as to which application or set of applications need to be adopted. The new entrant may have to adopt an aggressive network roll-out strategy as far as QoS, reach and foot print, network-reliability and supporting a good number of applications are concerned, from day one of the commercial launch of services. A good deal of innovation and imagination have to go into the type of applications to be launched so that customers can immediately feel the proper value addition [Value = (Quality X Service)/(CostXTime)] being brought to them by the existing/new entrant in the cellular business.

One has to excel in each and every department whether it is technical, marketing, sales, customer care etc in order to derive significant benefits out of new products and services. Customer care, for example, through the right adoption of CRM and key differentiating applications, has to be very proactive in increasing customer loyalty and thus, help reduce churn, say, from a figure of 25 percent per annum, to a very low level in order to make the business viable. The new entrant(s) as well as existing operators have to very closely follow the six (6) sigma approach in order to make the launch of new products and services successful, apart from providing world class service and improve upon its brand image. This in turn, will help enhance the revenue stream earnings which is the bottom line for the operators.

Maximising Business User Revenue

Most operators would like to decide to target business users as a priority and there are a number of compelling reasons for such a decision. In the first place, the business sector is usually willing to spend relatively freely on technology that improves efficiency and flexibility. In addition, it would be easy for the Indian operators to identify potentially attractive applications for the business sector than attempting the same process for the consumer sector. For a start, most business applications already exist and run on desktop computers. Such applications are in the process of being modified for use in a mobile context, with multi-platform e-mail at the top of everyone’s wish list. From a network planning perspective, the majority of these functions do not require high data rates, the exception being efficient Internet access and significant file transfer {both of which will be available via Edge technology or UMTS a few years later}.

In addition, a focus on the business sector means concentrating on the roll-out process which is more controllable and as a result, simplifies the work of an operator. The decisions about the applications (which require high data rates) will have considerable impact on network planning. The determination of cell size and location will depend on the rates required to run particular applications. The higher the data rates, particularly on the uplink, the smaller the cell size and the more expensive the network. This is true in terms of the cost of network infrastructure, deployment and operations. All this has to be carefully incorporated in the initial planning along with a suitable percentage of excess capacity (may be 20 percent to 30 percent), if an operator wishes everything to be right for him from day one in this competitive environment. Operators should avoid approaches that seek to balance future expectations with current needs. This will mean starting with lower data rates and less ambitious roll-out plans to save money and ultimately lead to a less-ambitiously dimensioned network which will not be able to provide competitive products and services to build market value at launch and during the early critical years.